# Question 26 Chapter 7 -Unimax Publication Class 12 Part 2 – 2021

Question No -26 Chapter no - 7 Unimax Class - 12 Part -II

Question 26 Chapter 7 – Unimax Publication Class 12 Part 2 – 2021

26. From the following particulars from the balance sheet of Khamish Ltd. As at 31st March 2022.

 Particulars ₹ Equity share capital 9,00,000 10% preference share capital 3,00,000 Capital reserve 1,00,000 Profit & loss balance 2,00,000 12% debentures 70,000 10% mortgage loan 2,00,000 Current liabilities 4,00,000 Non-Current assets 7,00,000 Current assets 6,00,000

Showing the full working, calculate the following ratios:
(I) Debt- equity ratio
(II) Proprietary ratio
(iii) Interest coverage ratio
Net profit after interest and tax amounted to 2,00,000
Rate of income tax was 50%

## The solution of Question 26 Chapter 7 – Unimax Publication Class 12 Part 2-2021 : –

 (I) Debt equity ratio = Debt Equity
 Debt =  debenture + mortgage loan = 70,000 + 2,00,000 Equity = equity share capital + preference share capital + capital reserve + P&L balance = 9,00,000 + 3,00,000 + 1,00,000 + 2,00,000
 Debt equity ratio = 2,70,000 = 15,00,000 .18 : 1 (II) Proprietary ratio = Equity Total Assets Total Assets = non-current assets + current assets 13,00,000 7,00,000 + 6,00,000 Proprietary ratio = 15,00,000 = 1.15 : 1 13,00,000
 (iii)Interest coverage ratio = net profit before interest & tax fixed interest charges Fixed interest charges = 12% int. on debt + 10% int. on mortgage loan = 8,400 + 20,000 = 28,400

Net profit before interest and tax is calculated as follows:
Net profit after interest & tax = 2,00,000
Net profit before tax = 2,00,000 x 100/(50 ) = 4,00,000
Net profit before interest & tax 4,00,000 + 28,400 = 4,28,400

 Interest coverage ratio = 4,28,400 = 15.08 times 28,400

Comment if you have any Doubts.

Accounting Ratios – Meaning and Definition